PF Applicability on Notice payment

Dear All,

We are paying three months full CTC as Notice period payment, Please advise whether PF applicable on Notice period payment or not?

Thanks & Regards,
Amit Gupta

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Hi Amit,

Please let me know under which component you are paying him , i mean as salary or as Other earning or any other component accordingly i can confirm you .

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Hi Arpana,

Thanks for quick response, we are paying notice period as Service compensation .

Regards,
Amit

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PF is applicable on notice period payment as the amount paid during notice period is also salary. Any amount which is paid to an employee during his tenure in the organisation as salary in regular period/notice period… PF is applicable even it is for one day payment

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Hi Bharath,

If we terminate the employee and his service was completed at the time of termination…and employee tenure is completed.
If terminated employee was not part of organization … whether PF is applicable?

we are paying payment of notice period as Service Compensation. … whether PF is to be deducted on Service compensation.?

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Hi Amit,

P.F need not be paid on compensation in lieu of notice which is generally paid under the pay head ‘Notice period pay’. It is not a regular monthly wage component and is a one-time payment in the final settlement.

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Hi Amit,

If 3 months salary in lieu of Notice period paid under "Salary Compensation will not attract PF. If this would have paid as regular payment could have attracted PF.

Hope this information will be helpful.

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Hi ,

Can we pay this notice period amount the compensation under other earnings as one time payout.

Regards,

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Thanks Deepa and Arpana

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Hi Shwetha,

If you do not wish to show the payout as ‘notice period pay’, it can be termed ‘ex-gratia’. If you pay as ‘other earnings’, it is likely to be viewed as ‘Special Allowance’ which could create an issue later. However, if there is a clear communication made on termination by the Company, it is better to show as ‘notice period pay’ (to comply with your appointment terms).

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Thank you Deepa. This helps

Regards,

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Hi

salary and service compensation are two different components while the first is paid in terms of wages of the employment and the second is paid to compensate the employee during retrenchment, lay off etc.

Any payment paid in terms of salary till his last date of service will attract PF. Service compensation does not attract PF payment.

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HI amit

Your question is itself self explanatory. CTC…Cost to company includes employee & employer pf deductions. Hence your question is answered by you. :grinning:

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Hi,

https://indiankanoon.org/doc/1425928/

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Hi Shwetha,

Yes, you can pay .

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I am not finding any such rule but yes i am agree to consider PF for notice period.

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